Texas Pacific still had a few billion burning a hole in its pocket. The private equity firm strikes again joining Apollo Management to buy Harrah’s for a deal, including debt, worth $27.8 billion. You can do big deals like buying part of Sabre, Qantas, and now Harrah’s if you raised $15 billion in the world’s second-largest buyout fund.
Even with forking over a lot of money they bought the casino group for cheap:
At $90 a share, Texas Pacific and Apollo would be paying less for Harrah’s earnings than what Las Vegas Sands’ or MGM’s profits are worth on the stock market. Harrah’s is being valued at 21.4 times projected 2007 earnings, based on the average estimate of 18 analysts surveyed by Bloomberg. That compares with a 23.1 ratio for MGM Mirage and 51.5 for Las Vegas Sands Corp., according to Bloomberg data.
That’s what I call smart money.